Thursday, March 3, 2011

The Competitive Edge of Walmart

In today’s economy, it’s a fight to stay consistent amongst retailers around the nation. In a time where consumers are constantly looking for the best deals before spending their hard earned money, it is now necessary to have a competitive attitude for any company in this tough market. Big businesses such as Wal-Mart, Target, and Best Buy are just a few of the major retailers who have been able to prosper and remain somewhat ahead of the curve compared to others. This in part is due to the simple fact that these three companies have been known for fitting their prices around the consumer. Majority of shoppers aren’t going to spend extra at one store, when they know they are guaranteed a low price at one of these locations. But even though Target and Best Buy have these low prices, neither have been able to truly compete with Wal-Mart, whose current slogan is “Save money. Live better”. This universal idea has led Wal-Mart to billions of dollars made in sales, and has even made it harder for any small business in the market trying to compete. Many of these small businesses have completely folded within the last few years, or have had to adjust their prices drastically to maintain.

Wal-Mart store manager Ryan Wilson explained, “Wal-Mart is a company that has always had the best interest of the customer. At this store in particular, we focus on giving the best customer service possible and also make sure that our rollback prices are up to date and are on clear display.” Over the years, Wal-Mart has advertised these rollback prices in all of their weekly flyers and many of their commercials and national ad campaigns. Most recently, the company created a fictional character by the name of Mr. Rollback for commercials, who highlights all the rollback prices in the store and showcases the customer excitement. Wilson added, “The whole idea of rollback prices is to show the original higher price compared to the much lower mark down price. When customers see this, they are able to get a better understanding of how much money they are actually saving.” Has this well-crafted marketing technique by Wal-Mart been effective? “It has definitely been effective. If we didn’t show rollback prices in the store, customers would be both unaware of how much they are saving and would more than likely question if other stores have lower prices on the same item. Another thing is this, if one of our competitors have a lower price on the same item, we can match that price with a valid ad from that particular store” said Wilson.

This brings up a valid point. Wal-Mart actually has had a competitive edge over many companies because they match prices. Other big retail chains such as Borders, a bookstore that is now going out of business, never matched prices on their books, movies, or music, which ultimately led to their fate today. In this type of economy, you have to match prices to stay in business, because the majority of consumers don’t mind making a trip to the stores with the lower prices. Retail chains like Best Buy have grasped this idea, and are now price matching without a problem. Target on the other hand does not do this, and continues to stick by the policies they made from the start. Wilson added, “If you walk into most Wal-Mart stores today, you will see an area that has every competitor ad from the weekly newspaper displayed. This is something that corporate makes top priority for all stores.”

Wal-Mart market manager Pam Johnson said, “When I visit the stores in my area, one of the main things I stress to all the store managers and assistant managers is to showcase competitor ads. The customers have to know that we match prices, but also need to see that we offer the best prices.” It’s hard to argue against Wal-Mart having the best prices, because typically they do. Johnson then added, “Because of rollback signs throughout the stores, competitor ad’s in front of the stores, and having associates in their areas who are knowledgeable about the great deals we offer, the market is doing fantastic.” When asked about how the company is doing as a whole, “Sales reports for most of the stores nationwide have been right on track. Based on proximity, some stores are doing better than others, but in my market alone sales have doubled within the past year.”

Recent news reports have criticized Wal-Mart for taking away sales from many small businesses around the nation. The fact that the popular retail chain mainly consists of supercenters which sell groceries, apparel, electronics, and much more, has completely eliminated the need for most people to go to smaller stores. Residents in New York City seem to be against the addition of Wal-Mart supercenters, in that it would take away from successful small businesses that have been thriving for years. Johnson explained, “Wal-Mart is a one stop shop, that’s how they’ve been set up. Families visit our stores and purchase everything they need all at once. You can get your groceries, a new TV, and even items for your home without having to travel from store to store.” Wal-Mart has also helped eliminate many of the popular movie rental locations such as Blockbuster and Hollywood Video, due to the fact that the stores now carry Redbox, in which you can rent movies for only one dollar.

Jon Anderson, store manager of one of the Blockbuster’s currently in the process of closing said, “Wal-Mart has definitely had an effect on Blockbuster, along with Netflix and other things. Why rent a new release for five dollars, when you can rent it for cheap.” Anderson made a valid point. Along with updates in technology, where you can rent movies through Netflix, the Redbox has been crushing competition. “It doesn’t make sense to drive to Blockbuster from Wal-Mart to get a movie anymore. The Redbox is right there as you’re leaving the store” added Johnson.

Ultimately, Wal-Mart is a thriving business that has been able to maintain itself throughout the economic downturn. By grasping the idea “everything goes,” the company continues to have a true competitive edge.